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Mayor proposes water rate hike, cost-of-living raises for all city employees

Budget plan for 2014 presented to council on Tuesday

By Jason MortonStaff Writer | The Tuscaloosa News

Published: Wednesday, September 4, 2013 at 3:30 a.m.

Last Modified: Wednesday, September 4, 2013 at 12:08 a.m.

Mayor Walt Maddox’s proposed budget for fiscal 2014 calls for a 4 percent increase of water rates and a 2.1 percent cost-of-living raise for all city employees.

The budget, presented to the City Council on Tuesday, estimates a $130.56 million General Fund with a contingency balance of $301,568.

The Water and Sewer Fund, which does not balance because of the inclusion of depreciation, lists $41.77 million in revenues against $44.19 million in expenses.

Without depreciation, expenses would be estimated at $36.99 million, Maddox said.

The total estimate in surplus dollars is $44.39 million. Maddox said this is based on the reserve estimates from the fiscal 2012 annual audit.

“The reason this city is so financially strong is because this City Council has had the political will to be fiscally conservative,” Maddox said. “I encourage you to keep that conservative philosophy.”

The City Council took no action on the fiscal 2014 budget. It is scheduled to review and offer amendments, if any, prior to next week’s regularly scheduled council meeting in a series of open meetings.

A council vote on adopting the final budget could come as early as Sept. 17.

Finding a conservative balance for the Water and Sewer Fund was one of four key challenges the mayor said influenced the fiscal 2014 budget, which begins Oct. 1.

Maddox said the heavy and frequent rain in recent months made it difficult to predict next year’s water sale revenues.

“Water and sewer, for the most part, is a stable revenue source ... ,” Maddox said, “but with the recent rainy summer it’s put quite a question mark on what we can expect for the coming year.”

As a result, the estimate of $22.71 million in water sales is the same amount of revenues that the city expects to tally by Sept. 30, which marks the end of the current fiscal year with, despite the 4 percent rate increase next year.

Likewise, the estimated sewer sales is $16 million, which is the exact figure that officials predict fiscal 2013 will bring in to the department.

“We’re going to have to prepare for this as the new normal,” the mayor said. “The years where we have dry weather, for the foreseeable future, are few and far between.”

The largest departmental expenses in the Water and Sewer Fund also are the same as in recent years. Operation of the wastewater treatment plant, the water treatment plant, water distribution efforts and the water works office operations together make up $18.15 million, or 41 percent of the fund’s projected expenses.

For the General Fund, the city’s primary departmental expenses are in public safety. Together, the Tuscaloosa Police Department and Tuscaloosa Fire and Rescue Service amount to $49.22 million, or 37 percent of the fund’s overall expenses.

“It really shouldn’t be much of a surprise that that’s where our main investment is,” Maddox said.

Adding to this year’s police and fire expenses is the assumption of all costs associated with the hiring of 12 new firefighters and 12 police officers that, for the past two and three years respectively, were funded through federal grants.

Maddox said the addition of these 24 positions to the city’s payroll amounts to about $1.5 million in new expenses for fiscal 2014.

Also new in fiscal 2014 is the first of a 10-year commitment by City Hall to add to the incentive package offered by the state government to entice Mercedes-Benz U.S. International into expanding its operation plant near Vance. For this, the city of Tuscaloosa will contribute $800,000 annually for the next decade.

This total factors in to the total of $8.43 million in citywide debt for next fiscal year, a figure that Maddox said isn’t that bad considering the amount of Tuscaloosa residents.

“This is one of the lowest per capita debts in the state of Alabama,” Maddox said.

Other key expenses projected in next year’s budget is $13.78 million for the operation of the Tuscaloosa Department of Transportation, $7.33 million for the city’s Environmental Services Department and another $5.04 million for the Facility Maintenance Department.

Agency funding for fiscal 2014 is predicted at $12.32 million, which amounts to the fourth largest expense total of all city departments.

The mayor’s budget also calls for the creation of four new positions that will be funded with federal dollars provided by the U.S. Department of Housing and Urban Development.

All but one of these positions are expected to go away after the $43.9 million awarded by HUD earlier this year is used up, Maddox said.

To pay for these General Fund expenses, Maddox predicts a 2 percent increase over the $127.75 million that is expected to be collected by the end of fiscal 2013.

Maddox said he is expecting $130.56 million in revenues in fiscal 2014 because the previous years’ revenues were temporarily enhanced from storm recovery spending that is not expected to repeat year-after-year, such as the revenue jump from $112.12 million in fiscal 2011 to the $129.83 in fiscal 2012.

“Our revenues did not grow by $17 million in one fiscal year,” Maddox said.

But that does not mean increases are not expected.

For example, Maddox has budgeted a 2 percent increase in city sales tax revenues to $34.15 million, although the average monthly increase in fiscal 2013 has been about 3.2 percent, which makes the estimated city sales tax collection for this fiscal year at $33.47 million.

County sales tax revenues, which averaged a monthly increase of 6.7 percent over that collected in fiscal 2012, are expected to increase by 3 percent to $13.93 million in fiscal 2014.

Current fiscal year projections project the city’s portion of the county sales tax to reach at least $13.52 million by the end of fiscal 2013 on Sept. 30.

Additionally, business licenses are expected to reach $18.8 million next year (a 1.6 percent increase over fiscal 2013 estimates), property taxes are budgeted at $12.52 million (a 3.4 precent increase) and building permits are predicted to reach $1.6 million (a 5.6 percent increase) in fiscal 2014.

<p>Mayor Walt Maddox's proposed budget for fiscal 2014 calls for a 4 percent increase of water rates and a 2.1 percent cost-of-living raise for all city employees.</p><p>The budget, presented to the City Council on Tuesday, estimates a $130.56 million General Fund with a contingency balance of $301,568.</p><p>The Water and Sewer Fund, which does not balance because of the inclusion of depreciation, lists $41.77 million in revenues against $44.19 million in expenses.</p><p>Without depreciation, expenses would be estimated at $36.99 million, Maddox said.</p><p>The total estimate in surplus dollars is $44.39 million. Maddox said this is based on the reserve estimates from the fiscal 2012 annual audit.</p><p>“The reason this city is so financially strong is because this City Council has had the political will to be fiscally conservative,” Maddox said. “I encourage you to keep that conservative philosophy.”</p><p>The City Council took no action on the fiscal 2014 budget. It is scheduled to review and offer amendments, if any, prior to next week's regularly scheduled council meeting in a series of open meetings.</p><p>A council vote on adopting the final budget could come as early as Sept. 17.</p><p>Finding a conservative balance for the Water and Sewer Fund was one of four key challenges the mayor said influenced the fiscal 2014 budget, which begins Oct. 1.</p><p>Maddox said the heavy and frequent rain in recent months made it difficult to predict next year's water sale revenues.</p><p>“Water and sewer, for the most part, is a stable revenue source ... ,” Maddox said, “but with the recent rainy summer it's put quite a question mark on what we can expect for the coming year.”</p><p>As a result, the estimate of $22.71 million in water sales is the same amount of revenues that the city expects to tally by Sept. 30, which marks the end of the current fiscal year with, despite the 4 percent rate increase next year.</p><p>Likewise, the estimated sewer sales is $16 million, which is the exact figure that officials predict fiscal 2013 will bring in to the department.</p><p>“We're going to have to prepare for this as the new normal,” the mayor said. “The years where we have dry weather, for the foreseeable future, are few and far between.”</p><p>The largest departmental expenses in the Water and Sewer Fund also are the same as in recent years. Operation of the wastewater treatment plant, the water treatment plant, water distribution efforts and the water works office operations together make up $18.15 million, or 41 percent of the fund's projected expenses.</p><p>For the General Fund, the city's primary departmental expenses are in public safety. Together, the Tuscaloosa Police Department and Tuscaloosa Fire and Rescue Service amount to $49.22 million, or 37 percent of the fund's overall expenses.</p><p>“It really shouldn't be much of a surprise that that's where our main investment is,” Maddox said. </p><p>Adding to this year's police and fire expenses is the assumption of all costs associated with the hiring of 12 new firefighters and 12 police officers that, for the past two and three years respectively, were funded through federal grants.</p><p>Maddox said the addition of these 24 positions to the city's payroll amounts to about $1.5 million in new expenses for fiscal 2014.</p><p>Also new in fiscal 2014 is the first of a 10-year commitment by City Hall to add to the incentive package offered by the state government to entice Mercedes-Benz U.S. International into expanding its operation plant near Vance. For this, the city of Tuscaloosa will contribute $800,000 annually for the next decade.</p><p>This total factors in to the total of $8.43 million in citywide debt for next fiscal year, a figure that Maddox said isn't that bad considering the amount of Tuscaloosa residents.</p><p>“This is one of the lowest per capita debts in the state of Alabama,” Maddox said. </p><p>Other key expenses projected in next year's budget is $13.78 million for the operation of the Tuscaloosa Department of Transportation, $7.33 million for the city's Environmental Services Department and another $5.04 million for the Facility Maintenance Department.</p><p>Agency funding for fiscal 2014 is predicted at $12.32 million, which amounts to the fourth largest expense total of all city departments.</p><p>The mayor's budget also calls for the creation of four new positions that will be funded with federal dollars provided by the U.S. Department of Housing and Urban Development.</p><p>All but one of these positions are expected to go away after the $43.9 million awarded by HUD earlier this year is used up, Maddox said.</p><p>To pay for these General Fund expenses, Maddox predicts a 2 percent increase over the $127.75 million that is expected to be collected by the end of fiscal 2013.</p><p>Maddox said he is expecting $130.56 million in revenues in fiscal 2014 because the previous years' revenues were temporarily enhanced from storm recovery spending that is not expected to repeat year-after-year, such as the revenue jump from $112.12 million in fiscal 2011 to the $129.83 in fiscal 2012.</p><p>“Our revenues did not grow by $17 million in one fiscal year,” Maddox said.</p><p>But that does not mean increases are not expected.</p><p>For example, Maddox has budgeted a 2 percent increase in city sales tax revenues to $34.15 million, although the average monthly increase in fiscal 2013 has been about 3.2 percent, which makes the estimated city sales tax collection for this fiscal year at $33.47 million.</p><p>County sales tax revenues, which averaged a monthly increase of 6.7 percent over that collected in fiscal 2012, are expected to increase by 3 percent to $13.93 million in fiscal 2014.</p><p>Current fiscal year projections project the city's portion of the county sales tax to reach at least $13.52 million by the end of fiscal 2013 on Sept. 30.</p><p>Additionally, business licenses are expected to reach $18.8 million next year (a 1.6 percent increase over fiscal 2013 estimates), property taxes are budgeted at $12.52 million (a 3.4 precent increase) and building permits are predicted to reach $1.6 million (a 5.6 percent increase) in fiscal 2014.</p><p>Reach Jason Morton at jason.morton@tuscaloosanews.com or 205-722-0200.</p>